Class #22 "Comparative and Absolute Advantage" (10/24/2011)

This class talked about absolute advantages vs comparitive advantages.

Absolute Advantage is stragith up ability to produce something. Without regard to cost, efficiency and more.
Comparative Advantage is how much more efficient yhou are at producing somethign in comparison to someone else producing something.
Example
Rochester and Cornell and wine/camera production.

A key point here is that no one can have comparative advantage in everything. Becuase in order to produce something you must be trading off the ability to produce something else.

Each person has a comparative advantage in something, and this means they can specialize in that something, and use trade to get the things they do not produce. This concept allows everyone to get richer.

Thus being social allows for an increase in wealth, Thus self-sustainability is the road to poverty. The more closed off we are as humans the less trade can flow and this the poorer we are.

Example.
The USA is one huge free trade zone, and that is what allowed the country to become so rich, becuase trade is so easy between states. That is why the income per capital in USA's poorest states (New Mexico) is higher than those of France and Italy.

NOTE: All of the graphs and other explanations could be fine in by notebook no in the blog.

-Rizzo

Daniel Gaona/Cy